Creditors’ Right of Revocation: Revoking Fraudulent Acts and Methods of Restoration

Based on 115 consultation cases · Updated October 4, 2026 · Translated from the Korean original.

If a debtor disposes of property, leaving insufficient common security for general creditors, and the debtor knew of the circumstances, a creditor may seek revocation of the fraudulent act and restoration from the beneficiary or others. The scope of revocation and the method of restoration vary depending on factors such as security interests, whether an auction is underway, and the purpose and timing of the disposition. The action must be brought within the prescribed period.

People involved → Debtor → Creditor → Beneficiary or later transferee → Debtor disposes of property and a creditor seeks revocation → Did the disposition leave common security insufficient and did the debtor know of the risk? → Did the creditor claim already exist, or qualify under the future-claim exception? → Is it established that the recipient did not know of the prejudice? → Revocation may be available to protect the creditor claim → Revocation is unavailable on this test → Limit the remedy to what is needed to protect the claim; account for actual secured debt on mortgaged property → Check restoration method: return the property, value compensation if return is impossible or very difficult, or auction proceeds paid out → Bring the action within one year after learning the grounds and within five years after the act → Yes — Civil Act Article 406 → No → Yes → Scope → Restoration → T…

Key points

The creditor’s right of revocation may be exercised when the debtor’s disposition of property leaves the common security insufficient, making it difficult for the creditor to obtain satisfaction of the claim. It is sufficient that the debtor was aware of that risk for the debtor to have the intent to prejudice creditors (Civil Act, Article 406 (민법 제406조)).
An act cannot be revoked if it is established that the beneficiary or subsequent transferee did not know, at the time of the disposition, that it would prejudice the creditor. If the debtor’s intent to prejudice creditors is established, the beneficiary’s bad faith may be presumed, and the beneficiary’s good faith must be supported by objective evidence.
As a general rule, the claim to be protected must have arisen before the fraudulent act. However, an exception may apply if, before the act, a legal relationship forming the basis for the claim already existed and the high probability that the claim would arise in the near future was subsequently realized.
Revocation and restoration are limited to what is necessary to protect the creditor’s claim. For real estate subject to a mortgage, the relevant amount is generally the remainder after deducting the actual amount of the secured claim from the market value. The maximum secured amount must not be confused with the actual claim amount.
If return of the property itself is impossible or significantly difficult, compensation for value may be sought. If real estate has been sold at auction and the sale proceeds have been paid in full, the beneficiary may be required to return the proceeds distributed to them instead of undoing the successful bidder’s ownership.
Each of multiple creditors may seek revocation and restoration. Revocation and restoration are effective for the benefit of all creditors, but other claims may overlap to the extent that restoration has actually taken place (Civil Act, Article 407 (민법 제407조)).
Renunciation of a debtor’s inheritance share under an agreement on the division of inherited property may also constitute a fraudulent act if it reduces the common security. However, only the portion falling short of the specific inheritance share, after taking special benefits and other factors into account, may be revoked.
Property division and the provision of security to raise business funds cannot be deemed fraudulent acts based solely on their form. Relevant considerations include whether the property division exceeded a reasonable scope and whether the provision of security was necessary for the continuation of the business and the raising of new funds.

Frequently asked questions

Q. Can a debtor’s transfer of property to another person always be revoked?

Not necessarily. It must be established that the disposition left the common security insufficient, making it difficult to recover the creditor’s claim, and that the debtor knew of that risk. Revocation is also restricted if it is established that the beneficiary or subsequent transferee did not know of those facts at the time.

Case 1, Case 14, Case 15

Q. By when must an action to revoke a fraudulent act be brought?

A creditor must bring an action within one year after learning the grounds for revocation and within five years after the juridical act constituting the fraudulent act. The date on which the creditor learned the grounds for revocation means the date on which the creditor learned of the specific fraudulent act and the debtor’s intent to prejudice creditors, not merely the date on which the creditor learned that property had been disposed of (Civil Act, Article 406 (민법 제406조)).

Case 1, Case 6

Q. Can an act be revoked even if a guarantee obligation or a claim for reimbursement had not yet arisen when the fraudulent act occurred?

As a general rule, the claim to be protected must have arisen before the fraudulent act. However, it may exceptionally qualify as a claim protected by the right of revocation if, at the time, a legal relationship forming the basis for the claim already existed and the high probability that the claim would arise in the near future was subsequently realized.

Case 4, Case 23

Q. Can a debtor’s renunciation of their share in an agreement on the division of inherited property also be revoked?

If a debtor in an excess-of-debt state renounces rights to an inheritance share, thereby reducing the common security available to general creditors, the renunciation may constitute a fraudulent act. However, revocation may be limited to the portion by which the share falls short of the debtor’s specific inheritance share, taking special benefits and contributions into account.

Case 5

Q. How is the scope of revocation determined when real estate subject to a maximum-amount mortgage is transferred?

As a general rule, a fraudulent act is established to the extent of the amount remaining after deducting the actual amount of the secured claim from the market value of the real estate. The relevant amount may be the claim that actually arose, rather than the maximum amount secured by the mortgage. Even if the mortgage is later canceled, revocation and compensation for value are generally sought up to the amount of that remainder.

Case 2, Case 9, Case 17

Q. Can multiple creditors sue to have the same disposition of property revoked?

Each creditor may seek revocation and restoration in their own right if the requirements are met, so multiple actions may be brought in relation to the same fraudulent act. However, once the property or its value has actually been restored, the interest in other claims may be limited to the extent that they overlap with that restoration (Civil Act, Article 407 (민법 제407조)).

Case 3

Q. How can property transferred through a fraudulent act be restored if it has already been sold at auction?

Once the purchase price has been paid in full, restoration cannot be achieved by canceling the successful bidder’s ownership. Depending on the circumstances, the beneficiary may be ordered to return the proceeds distributed to them, or compensation for value may be sought if return of the property itself is impossible or significantly difficult.

Case 1, Case 18

Q. Can a transfer of real estate to a spouse as part of a divorce property division be revoked?

As a general rule, a division of property does not, by itself, constitute a fraudulent act. However, if the division is excessive and there are special circumstances indicating that it was a disposition made under the pretext of dividing property, it may be revoked to the extent that it exceeds a reasonable division. The creditor must prove those special circumstances.

Case 21

Q. Is it a fraudulent act to enter into a consumer loan agreement or prepare a notarial deed to repay an existing debt?

Payment of an existing debt is, as a general rule, an exercise of a right that the creditor may demand. Therefore, unless the debtor and beneficiary acted in collusion, it is difficult to conclude that entering into a consumer loan agreement itself constitutes a fraudulent act. When a notarial deed consenting to compulsory execution is prepared, it must be examined whether the act substantially reduced the debtor’s assets available to satisfy creditors.

Case 24

Relevant laws

Civil Act, Article 406 (민법 제406조)
Civil Act, Article 407 (민법 제407조)
Civil Act, Article 320 (민법 제320조)
Civil Act, Article 108 (민법 제108조)
Civil Act, Article 839-2 (민법 제839조의2)
Civil Act, Article 368 (민법 제368조)
Civil Act, Article 481 (민법 제481조)
Civil Act, Article 482 (민법 제482조)
Civil Act, Article 103 (민법 제103조)
Act on the Registration of Real Estate under Actual Titleholder's Name, Article 4 (부동산 실권리자명의 등기에 관한 법률 제4조)
Housing Lease Protection Act, Article 3 (주택임대차보호법 제3조)

Watch out for

The action must be brought within one year after learning the grounds for revocation and within five years after the juridical act occurred. The date on which the grounds for revocation were learned and the date on which the juridical act actually took place must be checked separately.
The circumstances at the time of the disposition are important in determining whether an act was fraudulent, but it must also be considered whether the common security remains insufficient when the right of revocation is exercised.
When calculating the value of real estate subject to a maximum-amount mortgage, the maximum secured amount must not be treated as equal to the actual amount of the secured claim.
The outcome may vary depending on the specific circumstances and purpose, including property division, provision of security to raise funds for a new business, or a disposition on terms more favorable than an auction.

Is it a Fraudulent Transfer if the Mortgage Exceeds the Property Value?

Source cases

This guide was compiled by AI from the following Korea Legal Aid Corporation consultation cases (in Korean).

This guide is general legal information about Korean law, not legal advice for your situation. For a specific case, consult a lawyer or the Korea Legal Aid Corporation (call 132 in Korea).